Good morning, everyone. Welcome to Tenet's Q2 conference call. My name is Catherine Hume, and I'm the CEO of CHF Capital Markets. We're pleased to present to you Johnson Joseph, President and CEO of Tenet Fintech Group. He will take you through the financial results that were announced yesterday. At the conclusion of Johnson's highlights, Jean Landreville, our CFO, will review the financial statements.
Our Q&A section will be managed by me. We will address the most prominent questions during the Q&A portion of the call. We will not be addressing the ones that could be posted live for the sake of time, but feel free to contact me after this conference call if some of your questions haven't been answered. Please note that this call is being recorded and all participants are muted. As a disclosure statement, any discussion about future financial results and industry prospects should be considered forward-looking. Johnson, please take over from here. Thank you.
Thank you, Cathy. Good morning, everyone, and thank you for joining us. As Cathy mentioned, for today's agenda. So, as Cathy mentioned, for today's agenda, we're going to do a quick overview of what happened in Q2, what the plan is for the rest of the year. Our CFO, Jean Landreville, will go over the Q2 results, then we'll wrap up by answering a few of your questions. Okay, so, there's no other way to put it, the second quarter was a tough one for the company. Not so much in terms of revenue, but more in terms of the time we lost to finish the remaining pillars of the Business Hub and to launch our data-driven products offerings in Canada.
We've fallen several months behind schedule, but we're more determined than ever to show everyone how the Business Hub can potentially impact more, so much more than just small and medium-sized businesses. Now, that being said, it wasn't all negative for us in Canada. We continued to have meaningful discussions with potential partners that should eventually pay off for us throughout 2023 and formal partnerships. Now, in China, we finally began to see evidence of a bounce back from the COVID-19 lockdowns that affected so many of our clients. And the other positive thing that we can take out of the quarter in China is that we noticed a noticeable difference in the diversification of our revenues, particularly in the insurance sector, and Jean will go over the numbers a little bit later during the presentation.
But this bodes really, really well for the company, especially after we launch the data-driven products, later on this year, hopefully in Canada, and then at some point in 2024 for China as well. Now, in terms of outlook, what we expect for the remainder of the year, we're very conscious that access to capital in a timely fashion has been a challenge for the company, and it has been one of the biggest contributors, to our ability to grow the business and execute our business plan. So that's going to be a major area of focus for us for the remainder of 2023. Now, as you already know, we are currently working on a financing of convertible debentures, of which we've closed so far, a first round and several tranches of a little bit more than CAD 10 million.
We will be looking to close the second half of that funding at some point in the next few weeks, or hopefully before the end of September. So with that capital, this should give us enough capital, if successful, to be able to execute our business plan and meet most of our short-term goals, not just in 2023, but for the beginning of 2024 as well. The second thing that we're going to be focusing on for the remainder of 2023 is to make progress on the completion of the Business Hub.
Now, before what happened in the second quarter in terms of at the leadership level, I should say the flux, the volatility that we had at the leadership level in Q2, before that happened, our objective was to complete the Business Hub before the end of 2023. Now, as I mentioned earlier, we've lost a lot of time, and unfortunately, that is not going to be feasible. So, we now expect to be able to complete the Business Hub in its entirety, probably before the end of Q2. Now, we're going to be delivering pillars. We have three remaining pillars to deliver. The intention is to deliver the pillars over time.
By the end of the first quarter, we anticipate that we should have, first quarter of 2024, that is, we anticipate that we should have at least three of the four, pillars. And that should be, that should be able to generate a lot of traffic on the Business Hub and significantly increase the membership. Now, the third aspect, the third thing that we wanna focus on in Canada is obviously to have our first data-driven product offering. So, the ie-Pulse product, which is detailed, which has been detailed in, several instances of our MD&A. So, I would, I would encourage you to go back and read the MD&As if you wanna have a little bit more details on what ie-Pulse is.
We're also hoping to be able to have a demo of the ie-Pulse product on a Tenoris3 website launch before the end of this year. So that's going to give you a much better understanding of what ie-Pulse is, and why we feel that this is a product that could be very valuable to economists, governments, and capital markets folks. So again, that's gonna be a very significant area of focus for us between now and the end of 2023. And we really expect that this is going to give a new dimension to the company. I know we've been talking about data and data-driven products for at least a year now, but this is the year that we think this is all going to come into focus.
Finally, in China, as the company continues to expand in China, so we started in China in 2018. We're now covering several industrial sectors in China, and the objective is to be able to cover as many industrial sectors as possible, so that through the ie-Pulse product, we're able to give clients and subscribers to that product a very good overview or a pulse on economic activity in China. Again, so we believe that this is the future of the company, and once ie-Pulse is launched, I believe our investors and shareholders are gonna be able to make the connection between what we have been doing in China and the data that we're accumulating there, and how valuable that data is. Now, that wraps up my presentation.
I'm going to send it over to Jean, who's going to give you an overview of the actual financial results for the second quarter, and then we will come back and answer a few of your questions. Jean?
Thank you, Johnson, and welcome, everybody, to the show. So, I'm gonna make a quick review of the P&L, profit and loss for the Q2 of 2023 versus Q2 of 2022. Revenue for the period of three months is CAD 60,777,777 in 2023 versus CAD 32,432,000 last year. The reduction, for a reduction of CAD 50,656,000. Mainly the reduction is in the supply chain business, especially in the modern retail. So, the division ASSC, which is lower by CAD 20 million. So, during the period comparative to last year, there were the. The economy in China is picking up in the second quarter compared with after the COVID phases, but slowly.
So compared to last year, it was much lower, and there was an uncertainty around Tenet in general with all the movement at the head office. So, that's bringing some uncertainty and reduction in revenue. Good news, two good news to pick up here. Steel chain business, new acquisition of last year, made CAD 6 million higher than comparable with last year. So, which is good, good news for the company. And more importantly, like, Johnson mentioned, diversification of revenue is in the strategy for China. And the Heartbeat acquisition back in last quarter of 2021 is starting to pick them up in 2023 now. So, they made more, CAD 2.8 million increase in revenue compared to last year, with a total revenue of CAD 2.4 million for the period.
So, reduction, the CAD 60 million, roughly reduction in the supply chain business by CAD 16 million and the by CAD 19 million and CAD 3 million more on the Heartbeat side. Cost of service decreased. This is in line with the revenue of the supply chain, directly in line. So, the proportion is 18.3, 18 million lower in cost, directly attributable to the cost of service to the supply chain revenue. Software delivery service, the increase directly from the service that we need to expand for the Heartbeat business. There are some, w e need some SaaS services to give the service. Same thing for the service fee. They're directly attributable to the increase in the revenue for the Heartbeat, the insurance business.
Salary, fringe benefits, and bonus remuneration. We're gonna see the effect of the cost reduction. The headcount is lower at the end of Q2 of this year than last year, but on the average of the month, the salary was even higher in the second, this year compared to last year. We're gonna see the effect of the headcount reduction in Q3. Consulting fees, just a reversal of following a negotiation with the supplier from last year. So that's why we have the negative and positive expense of CAD 46,000. This is a one-time item only. Outsource services, mainly it's the cost for the deployment of the Cubeler platform in China and also in China for the outsource services to develop all the platform.
It's in Cubeler in China and for Cubeler, the difference of CAD 425,000. Professional fee, with all what was happening in the second quarter, there was a lot of legal fees involved, and that explains the difference of CAD 200,000 from CAD 195,000 compared with last year. The rest is more minor cost variance. So the total expense for the period was CAD 23.283 million, compared to CAD 37.512 million, directly attributable to the cost of service in the supply chain, for a net loss of CAD 6.454 million this quarter, compared to CAD 6.333 million, same period, same quarter last year, which is more comparable with a lot less revenue. So, just to keep in mind that in this expense of the 23 million, roughly there's I invite you to read the financial statement and the cash flow statement that we were filed yesterday to see the detail.
But roughly, rule of thumb, there's CAD 2.8 million of non-cash items. So if you take amortization, share base payment, accretion of interest, you're gonna add to CAD 2.8 million, which is non-cash item that we don't have to cash out these items. So just keep that in mind when you look at the result of the net. If you have any question, please send it to Catherine or Cathy, and we're gonna be very happy to answer later if you have question regarding the financial statement. That was, that was my two cents for the, for the quarter.
Okay. Thank you, Jean. Now, Cathy, I believe that we have some questions.
Yes, we do.
From some of our shareholders, so, I'll leave it to you.
Okay. Sure. The first question I have is, what is this special meeting all about?
Oh, yes. So, we are looking to hold a special meeting of shareholders in October in order for us to increase. Well, there are two main items on the docket, so increasing the number of directors to our board of directors so that, well, we're preparing to be able to eventually get to a senior exchange. We can't provide any, before anybody asks any question on that, we can't provide any updates or anything like that, but this would be in preparation basically for an eventual or potential senior listing down the line. So, increasing the number of directors is the first item. The second item is participation of insiders into future financings of the company. So, some of you may not be aware of this, but insiders, when we conduct financings, insiders are limited to a certain amount that they can invest.
I believe it's no more than 25%. The insiders, the collective investment from the insiders cannot exceed 25% of the company's market capitalization without having shareholder approval. So, that's the second item that we would be looking to address in that meeting, is to ask shareholders for further authorization so that insiders could participate and invest more than 25% of the company's market cap going forward.
Thanks, Johnson. So, to continue with that subject, with this dramatic increase in the percentage ownership of insiders, particularly yourself and Golden, what kind of impact do you see that having on the company overall?
Well, we're not, we're not doing that to have a, an impact on the company. Essentially, we understand what we have in our hands in terms of the company's potential, Golden and I in particular, and we basically, we're just betting on ourselves, and that, that's all that is. So, it's kind of like killing two birds with one stone as well. Like, we all know that the company had some financial issues, so we saw this as an opportunity basically to help the company have access to the capital it needs to in order for us to continue to execute our business plan. And by the same time, like I said, we're betting on ourselves. Increasing our ownership in the company is something that Golden and I have always talked about, and this was the right time to do it.
Okay, thank you. Last year, late last year, there was mention of a billion-dollar lender coming onto the Cubeler platform in China. What's the status of that particular lender?
A billion-dollar lender. So, that lender, the discussions have been ongoing with that particular lender. Obviously, like, I mean, there is concerns in terms of, like, what happened with the company in the second quarter, but that lender has joined the platform and has started to make loans. Obviously, like, I mean, he has not, l ike, I mean, they have not poured in CAD 1 billion into the platform yet, but slowly but surely, small steps, they are basically, they've started lending on the platform. So that's the good news.
Okay, great. Given the current economic slowdown in China, how exposed are the company's Chinese operations?
The economic—like, obviously, like, I mean, what happens, I mean, if the overall economy slows down, it's going to affect your business. I mean, an extreme example of that was the lockdowns in China, right? In the second half of 2022, we saw what that did to our business in China, to our revenue in China. And that. It didn't just impact our, you know, our operations in the third and fourth quarter, but there were lingering effects, right? So I was telling somebody yesterday, it's not like, you just turn on a switch, right? After the COVID lockdowns, it's not like, hey, you flip on the switch, and then, boom, you pick up right where you left off in terms of small businesses, right? There were some small businesses that were seriously impacted.
Some of them, unfortunately, went out of business. Some of our clients went out of the business, so that's why our revenue took a nosedive. Now, we are encouraged by what we're seeing right now in terms of recovery in the economy, but if that continues, certainly there will be a negative impact on our business. But I do wanna point out something, though. Like, I mean, the business model that we have in China is predicated on transaction fees, right? We facilitate. In a general sense, we facilitate transactions, and we collect service fees, right? That's how we generate our revenue in China. Now, once we introduce the data-driven products, we are addressing. Our revenues are based on a completely different type of service.
People will always want to know what's going on with the economy, right? So imagine having a barometer, in almost near real-time, that is showing you what's happening, throughout China. You know, you're looking at the overall economy in China, and you're able to know ahead of time, before the government puts out numbers or anything like that. You would be able to know, get a sense of whether or not the economy is doing well or not doing well, right? So with that type of product, we believe that we're going to kind of like hedge our revenue risk in China, once we introduce those data-driven products over there in the country.
Obviously, like, I mean, they're gonna start here in Canada and potentially in North America, but eventually, like, we will get them to China. Once those revenue streams begin, in my opinion, they're going to provide more stability overall to the company's revenue.
Thank you. Considering the massive number of layoffs and dismissals during the last quarter, has it been difficult to reinstate your senior team? How is it going?
Well, for the most part, most of our senior leadership team were, t hey were kind of, like, on standby. I think we all knew that eventually we would be able to take back control of the company, so to speak. So, we have been able to bring back most, if not all, of the senior executives and VPs. So, we're in pretty good shape right now going forward.
Great. Now, my last question is about transparency. Transparency has been non-existent for the last 12 months due to blackouts and quiet periods. What can we anticipate going forward?
Yeah, that's a tricky question. Listen, we are, again, we're in the midst of a financing right now, so once we close the second round of this financing, again, I don't know exactly when that is, but once we close that second round of financing, we're gonna be able to communicate more with the market, in terms of, where we're going, what the strategy is, and what people can expect going forward. So we do have a communications plan, that includes communicating more with the market.
Essentially, the points that I went over earlier during the presentation, where I talked about the priorities for the company, what our capital market strategy is going to be, what we're looking to do in terms of the Business Hub, completing the Business Hub, partnerships, and all that stuff, and also everything leading up to the launch of our data-driven products. So, our plan is to communicate regularly with investors and shareholders so that they can follow along and see that we are systematically executing on our business plan. So, following the announcement, hopefully, of the second.
The closing of the second round of the financing, which will give us the capital, that we need in order to continue to execute on our business plan. Investors can anticipate seeing more and more, in terms of communication, regular communication coming from the company, between now and the end of the year.
Great. Thank you so much for answering those questions, Johnson, and thank you for delivering the questions to us, great shareholders that we have. So that concludes our part of the meeting. Johnson, would you like to make a few closing remarks?
Sure. Thank you, Cathy. So once again, we wanna thank all of our investors. Listen, this has been, f or some of you, we understand that this has been a long journey. We appreciate your patience with the company. I know it's been a difficult year in 2023. There's been a lot of ups and downs, more downs than ups, but we're working very, very hard, and we do believe that we're gonna start to see some light at the end of the tunnel here before the end of the year. Again, we're putting a lot of, w e're waging a lot on our data-driven products, and we can't wait to be able to show you exactly what we mean. Tenoris3 is going to be key for us.
The Business Hub, certainly, we expect more activity on the Business Hub, but, certainly once we launch our data-driven products, we believe that our investors are gonna have a different appreciation for what it is that we're looking to accomplish. So once again, thank you very much for your continued support. We're looking to be able to communicate more often with you so that you are fully aware of what it is that we're doing. So, thank you very much. Enjoy the rest of your day, and, as we mentioned earlier, if you have any questions, that were not answered here today, please feel free to send them to Cathy, and it will be our pleasure, to answer any of your questions. Thank you.
Thank you, everybody.
Bye-bye.